This article originally appeared on ymyang.com.
Some founders asked me why I write about new IPOs all the time despite the fact that we’re doing early-stage investments.
The truth is that any founder should care, even if his/her own IPO or exit won’t happen in 4~6 years.
New IPOs give a rare peek into otherwise secretive startups. S-1 forms today are usually very colloquial so founders could also draw inspiration from the strategies of these founders that are already making it there.
Above all, just like private markets in Seed, A, B, C, etc rounds where a sort of market price exists, the same for IPO. And VCs care about the IPO pricing all the time since it concerns their own cash-out time. Given this backdrop, if a founder walks into a meeting talking about a business model that has just been trashed by the public market in a new IPO, such as Blue Apron’s, then imagine the chance of him or her getting funded.
I usually suggest founders reading at least the PROSPECTUS SUMMARY of the S-1 forms. And then also follow up to see how share prices react in the 1st week post-IPO, especially if the business models are similar to theirs.
It’s not a lot of work and it’s free. Above all, it’s worth it.
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